Britain’s housing market faces a “long road to recovery” as figures showed
mortgage lending failed to pick up last month.

Around 50,000 mortgages were approved to those buying a new home in September, unchanged from the previous month and 2 per cent lower than a year earlier, according to the Council of Mortgage Lenders.

A total of 29,000 people switched home loans in September, an increase of 4,000 loans and the highest level since March. Remortgaging accounted for 29 per cent of all advances during the month, the first time proportionate increase since May.

However, low standard variable rates and the problems that some borrowers face in taking out a new mortgage indicates that remortgage levels are unlikely to rise significantly during the coming months, the CML said.

It also unveiled the latest repossessions statistics which showed the number of people evicted from their homes fell for the fourth consecutive quarter to 8,900 between July and September, down from 9,400 in the preceding three months.

Michael Coogan, director general at the CML, said: “Borrowers react in different ways to a reduction in income or higher borrowing costs when interest rates rise. Many households are, in fact, adept at adjusting their spending and prioritizing their bills to manage their way successfully through periods of temporary difficulty. But the capacity to do this will depend on individual circumstances, the extent to which income falls or mortgage costs rise, and how soon they can get back into full employment.

"The government continues to have a vital role to play. So far, there has been welcome support through the severe recession, and this has reinforced the capacity of lenders and borrowers to deal with individual problems. But we cannot afford to lose our focus on the long road towards recovery from here, which is why the CML proposes further work with the government and debt advice agencies to enhance support for borrowers in difficulty."

The number of properties taken into possession was 27 per cent lower than the 12,200 in the same period a year ago, the CML said.

There was a slight improvement in the number of people who had fallen behind with their mortgage during the third quarter, with 176,100 people in arrears of 2.5 per cent or more of their outstanding debt, down from 178,200 at the end of June.

Paul Diggle, property economist at Capital Economics, said: "The continued fall in the numbers of arrears and possessions in the third quarter is encouraging.

"But figures showing an increase in possession orders being sought and awarded may mean that the improving trend will soon come to an end.”